Compelling benefit options for 2024

For 2024, brokers and TPAs will be well served to focus strongly on options that add significant value. In its recently released Survey on Health and Benefits Strategies for 2024, Mercer cited three key themes emerging from conversations with leadership from more than 700 organizations of varying sizes:

1. Employers anticipate significant inflationary impact on health plan costs, with a projected increase of 7% over 2023.
2. Employers will be challenged to balance benefits with cost controls, especially for those already facing financial constraints.
3. Attracting and retaining talent will remain very difficult, especially for industries with a relatively small labor pool.

One in four respondents said they had already begun working to improve their benefits programs in response to these issues. More than two-thirds will be incorporating changes for the upcoming plan year. 

Also: IN-DEPTH: 4 key health trends driving employer costs in 2024

For 2024 employers are seeking compelling benefit options that help fill perceived gaps, increase flexibility, and improve affordability. 

Adding value by filling gaps

Women’s health, family planning, and caregiver responsibilities are among the perceived gaps in traditional benefits programs. 

In regard to women’s health and family planning, areas that need more attention include high-risk pregnancy, postpartum issues, pregnancy loss, and menopause. Benefits that address these situations have high perceived value. In addition to boosting available medical coverage where possible, employers may want to consider offering a lifestyle spending account (LSA). This simple-to-administer, post-tax account can support employee needs in many areas. For example, the LSA can offer reimbursement for grocery delivery to relieve household tasks, self-care activities such as massages and facials, hotel and related “weekend getaway” costs, sleep and meditation apps, vitamins and supplements, and more.

Sponsoring employers can also experience significant ROI by addressing the support gaps often experienced by caregiving employees. The dependent care assistance program (DCAP) or dependent care flexible spending account (DCFSA) is an under-utilized option. Employees often do not realize that, in addition to care for children under the age of 13, these accounts can be used for dependent adults who need care and supervision while the employee is at work. Workers can save 30% or more in payroll taxes on the sums set aside for this purpose, and their employers save 7.65% in payroll matching expense on the amounts set aside.

Adding value through flexibility

Flexibility at work has long been in high demand, and has expanded to include adaptable work schedules and locations and fewer limitations on personal time off (PTO). Companies that are the most successful in attracting and retaining the best employees are those that support efforts to maintain a healthy work-life relationship. This may include allowing staff the time and flexibility to address family needs, deal with grief and loss, volunteer, take a sabbatical, and more. 

High-value perks such as flexible schedules, the ability to work from home regularly, and generous PTO allowances are gaining a lot of traction. As long as productivity benchmarks are being met, employers can provide benefits like these at little to no additional expense, creating an admirable ROI.

Adding value by improving affordability

Affordability always plays an important role in benefit option decisions, but the current inflationary climate and rising interest rates help keep it top of mind. Employers look to brokers and TPAs for their expertise in managing affordability as well as to find the most acceptable ways possible to transfer more of the cost responsibility to employees.

Common health coverage recommendations may include offering a free or very low-cost employee-only option, low-to-no deductible plans, salary-based contributions, high deductible plans coupled with a health savings account (and possibly a health reimbursement arrangement), and others.

Commuter/transit accounts can effectively help workers who have returned to the office. Employees can save up to 30% on payroll taxes by setting aside funds to cover their commuting expenses. Since employers also save on payroll matching expense for the set-aside funds, the company saves money simultaneously.

Finally, industry publications have recently examined why food access could be an emerging trend to help address chronic diseases and lower health care costs. The versatile lifestyle spending account can assist employees struggling to afford groceries or prepare nutritious meals by including eligible expenses such as healthy meal delivery, cooking classes, and specialty cookware.

In conclusion

The benefits landscape has changed quickly since the pandemic began in 2020 and successful brokers and TPAs must continue to help companies adapt. Budget-conscious employers must decide whether to absorb, share, or eliminate higher-cost options for the forthcoming year. 

Based on recent surveys, companies will focus largely for 2024 on perceived coverage gaps, flexibility, and affordability. Major decisions will revolve around prioritizing value versus shifting higher costs.

Bo Armstrong is a national conference speaker and author of numerous white papers and articles on the healthcare benefits industry. As DataPath’s Chief Marketing Officer, Bo focuses on identifying emerging market trends within the benefits industry and advocating for customers and their needs within DataPath.